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No There There – James Kwak – The Baseline Scenario

This is a syndicated repost published with the permission of The Baseline Scenario. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

By James Kwak

On the one hand, over in Romney headquarters, they can take heart from the fact that the economy continues to sputter, as evidenced by the latest jobs report. On the other hand, as the election draws near, people will only ask more questions about what President Romney would actually do. For months now, the campaign has whispered one thing to the base (e.g., “severely conservative”) while being purposefully vague to everyone else, hoping that independents will assume he is still the moderate who introduced universal health care to Massachusetts. Now that strategy is breaking down.

Exhibit A is yesterday’s comical back-and-forth-and-forth-and-back on the Affordable Care Act. But the more important Exhibit B is the Romney “tax plan”—you know, the one that cuts rates for everyone by 20 percent, yet does not reduce revenues, does not increase taxes on the middle class, and achieves this miracle by eliminating tax expenditures, but without touching the preferences for investment income or the mortgage interest tax deduction.

Back in February I wrote that this is a mathematical impossibility. The Times recently reported that it is still impossible, citing both Tax Wonk in Chief William Gale of Brookings and an Alan Viard of AEI(!).

Romney’s campaign continues to refuse to fill in the details, which isn’t surprising, since they can’t. But they can’t avoid the subject, either, since they want to make this an election about the economy—and their plan to improve the economy is, to a first approximation, their plan to cut tax rates.

Coupled with Romney’s refusal to release more details of his own taxes, including the magical IRA, the impression one gets is that he doesn’t want to talk about details; he’s just hoping that people dislike President Obama enough and trust him enough to get him through the election. The problem with that is Mitt Romney is no Ronald Reagan. He has no charisma, and the basis of his pitch is that he’s a skilled businessman. It’s also doesn’t make sense to play a prevent defense when you’re behind. But there’s no getting around the laws of arithmetic.

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